On October 28th local time, U.S. Treasury Secretary Timothy Geithner stated in an interview with the American Consumer News and Business Channel (CNBC) that further interest rate hikes by the Federal Reserve in the future do not necessarily mean a mistake in monetary policy. It is important to maintain an open attitude and assess whether the energy shock is only temporary and causing inflation to rise.
In recent weeks, the yield on U.S. government bonds has fallen from its highest level in over 20 years, but the benchmark 10-year U.S. bond yield is still above 5%.
Besent said, “I have always attached great importance to signals from the bond market. As Chairman Wash said during the July interest rate meeting, the bond market has already done a lot of work in tightening the situation for us.”
Many market participants believe that the AI financing boom has increased the capital pressure in the US debt market. To support industry expansion, AI companies have entered the corporate bond market on a large scale, with the cumulative issuance reaching trillions of dollars.
Besson said that both he and U.S. President Trump believe that after the end of the US-Iran conflict, global oil supply will become abundant. He believes that this will help to alleviate inflation and reduce borrowing costs.
This interview took place shortly after the Federal Reserve's latest interest rate decision was announced. On that day, the Fed released its October rate decision, and the Federal Open Market Committee (FOMC) maintained the federal funds rate range at 3.75%-4.00% with a vote of 10-2, in line with market expectations. Previously (on September 16), the Fed announced a 25-point interest rate hike, the first hike since the end of July 2023.
Bessen said that both he and Trump have confidence in Federal Reserve Chairman Wachsmann.
